Question 1 Audit Report Assume you are the partner in charge of the audit of Yellow Wood's 2023 financial statements The audit report has been prepared but you need to decide which audit opinion to issue In each of the hypothetical, independent situations described below, indicate the appropriate audit report to be issued At all times also state which specific condition is responsible for your decision Overall, you belief that the financial statements fairly present the company's financial position but, you want to emphasize in the audit report that Best Buy acquired a subsidiary during the current year ANSWER The auditors have no concerns about that there are material or pervasive issues, but Yellow Wood's CFO has decided to adopt the new accounting standard regarding disclosure of the income statement, which will only come into effect in 2027 ANSWER Two weeks before the end of fieldwork, you discover that Mary Terrence, the audit manager for the Yellow Wood audit, owns some of Yellow Woods ordinary shares ANSWER Multiple uncertainties exist regarding which effect Yellow Wood's financial statements as a whole ANSWER You were unable to confirm several large accounts payables However, using smart analytics reliable AI as alternative audit procedures you could examining subsequent cash payments, ANSWER Yellow Wood does business in China and must also report on financial statements under Chinese regulations but there is now concern that the financial statements contain no material uncertainty ANSWER Yellow Wood has three lease obligations that you believe should be capitalized to conform to NZ IFRS However, the client refuses to include them in the property and long term debt accounts on the balance sheet If the lease obligations were capitalized, property would be increased by $200,000, long term debt by $170,000, and retained earnings by $30,000 as of 31 12 23 You consider the amounts to be material, but not pervasively material ANSWER Yellow Wood's management is happy to accept the audit report with a qualified opinion but have requested you to restrict the circulation thereof as they are trying to apply for a significant loan from government ANSWER Yellow Wood's records revenue when cash is received The effects of the revenue recognition are pervasive throughout the financial statements Answer To save costs on the audit Yellow Wood suggested that rather than you flying to Fiji you make use of the local auditor in Fiji Mr X However, when you got the report back from Mr X about the accuracy of the inventory, you realized that you are unable to rely on their work and do not have any time to perform alternative procedures This item is material but as luckily not all the inventory comes from Fiji ANSWER

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Question 1: Audit Report Assume you are the partner in charge of the audit of Yellow Wood's 2023 financial statements. The audit report has been

Question 1: Audit Report

Assume you are the partner in charge of the audit of Yellow Wood's 2023 financial statements. The audit report has been prepared but you need to decide which audit opinion to issue. In each of the hypothetical, independent situations described below, indicate the appropriate audit report to be issued. At all times also state which specific condition is responsible for your decision.

Overall, you belief that the financial statements fairly present the company's financial position but, you want to emphasize in the audit report that Best Buy acquired a subsidiary during the current year.

ANSWER:

The auditors have no concerns about that there are material or pervasive issues, but Yellow Wood's CFO has decided to adopt the new accounting standard regarding disclosure of the income statement, which will only come into effect in 2027.

ANSWER:

Two weeks before the end of fieldwork, you discover that Mary Terrence, the audit manager for the Yellow Wood audit, owns some of Yellow Woods ordinary shares.

ANSWER:

Multiple uncertainties exist regarding which effect Yellow Wood's financial statements as a whole.

ANSWER:

You were unable to confirm several large accounts payables. However, using smart analytics reliable AI as alternative audit procedures you could examining subsequent cash payments,

ANSWER:

Yellow Wood does business in China and must also report on financial statements under Chinese regulations but there is now concern that the financial statements contain no material uncertainty.

ANSWER:

Yellow Wood has three lease obligations that you believe should be capitalized to conform to NZ IFRS. However, the client refuses to include them in the property and long-term debt accounts on the balance sheet. If the lease obligations were capitalized, property would be increased by $200,000, long-term debt by $170,000, and retained earnings by $30,000 as of 31-12-23. You consider the amounts to be material, but not pervasively material.

ANSWER:

Yellow Wood's management is happy to accept the audit report with a qualified opinion but have requested you to restrict the circulation thereof as they are trying to apply for a significant loan from government.

ANSWER:

Yellow Wood's records revenue when cash is received. The effects of the revenue recognition are pervasive throughout the financial statements.

Answer:

To save costs on the audit Yellow Wood suggested that rather than you flying to Fiji you make use of the local auditor in Fiji Mr X. However, when you got the report back from Mr X about the accuracy of the inventory, you realized that you are unable to rely on their work and do not have any time to perform alternative procedures. This item is material but as luckily not all the inventory comes from Fiji.

ANSWER: